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3 Innovation
The Innovation Concepts
The term innovation derives from the Latin word Innovatus which means to renew or change. Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies or ideas that are accepted by markets, governments, and society. Innovation differs from inventions or renovation in that innovation generally signifies a substantial positive change compared to incremental changes. ue to its widespread effect, innovation is an important topic in the study of !conomics, business, entrepreneurship, design, technology and engineering etc.
i) Society: In society, innovation aids in comfort, convenience and efficiency in everyday life. "or
instance, the benchmarks in railroad e#uipment and infrastructure added to greater safety, maintenance, speed and weight capacity for passenger services. These innovations included wood to steel cars, iron to steel rails, stove heated to steam$heated cars, gas lighting to electric lighting, diesel powered to electric diesel locomotive. %ther areas that added to everyday #uality of life include& the innovation to the light bulbs, cellular phones and L' s Television, microchips(processors etc.
ii) Economics and Business: In the business and economics innovation is the catalyst to growth, with
rapid advancement in transportation and communication over the past few decades the old world concepts of factor endowments and comparative advantage which focused on area)s uni#ue inputs are outmoded for today)s global economy. *arvard economist, Michael orter! points out competitive advantage or the productive use of any inputs, which re#uires continual innovation, is paramount for any speciali+ed firm to succeed. In addition, entrepreneurs continuously look for better ways to satisfy their consumer base with improved #uality, durability, service and price which come to fruition in innovation with advanced technology and organi+ational strategies.
iii) "r#ani$ations: In the organi+ational conte,t, innovation may be linked to positive changes in
efficiency, productivity, #uality, competitiveness, market share and others. All organi+ations can innovate including, for e,amples, hospitals, universities, and local governments. Innovative strategies include hospitals digitali+ing medical information in electronic medical records, computeri+ed and digital libraries in universities and computeri+ing official records of the government offices etc.
problem. All businesses have problems e.g. sales could be better, products could be better, process could be more efficient, cost could be reduced and so on. ii) Convert the pro&lem into a challen#e: %nce a problem has been identified, it needs to be converted into a challenge. !,ample challenges include& in what ways might one improve product. And how might one reduce wastage in his manufacturing process. etc. "ormulating a good challenge that addresses a problem is critical to the innovation process. If a challenge does not properly address the underlying problem, one may get a lot of ideas, but these ideas would not solve the problem and therefore, are unlikely to become innovations. iii) Challen#e collea#ues to su##est creative solutions: %nce a person has a terrific innovation challenge, he needs to communicate it to colleagues or others such as business partners, customers or even the public, so that they can generate ideas. *ow he communicates depends on the method of idea generation he will use for each instance of the innovation process. iv) Colla&orative Idea 'eneration: Idea generation might be in the form of a brainstorming activity, through the use of real idea management software or a team may be assigned to devise and develop ideas. A person can even generate ideas himself, but diverse teams generate more creative ideas than individuals. /hatever method of idea generation a person use, it should ideally be in collaborative environment in which people can work together to develop ideas. v) Com&ine and Evaluate Ideas: /ith lots of ideas the ne,t step is to combine similar ideas into idea clusters or big idea. !ach idea cluster can be processed as a single idea, thus making the ne,t steps of the process more efficient. These ideas are evaluated with an evaluation matri, in which promising ideas are compared to relevant business criteria. The better the idea meets each criterion, the higher its score. Ideas with the highest evaluation scores are taken to the ne,t step. vi) (evelop Ideas: *ow a person develops ideas depends on the innovation challenge and the kind of ideas generated. 0ew product ideas might be developed into prototypes. 1rocess efficiency ideas may be modeled. 2arketing ideas may be evaluated in consumer surveys and so on. The purpose of developing ideas is to test them in the business environment and if no insoluble problems are discovered these are prepared for implementation.
vii) Implement Ideas: "inally, the evaluated and developed ideas are turn into implementation that generates value for organi+ation. It is at this step that creative ideas grow up and become innovations. The implementing ideas are monitored for desired performance and in case of under$performing, ideas can be killed and resources can rapidly be reinvested in promising new ideas.
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Innovation by business is achieved in ways with much attention now given to formal research 9 development 4:9 5 for bread through innovation. :9 helps encourage patents and other scientific innovations that lead to productive growth in such areas as industry, medicine, engineering and government. ;et innovation can be developed by less formal on$the$6ob modifications of practices through e,change and combination of professional e,perience and by many other routes. The more radical and revolutionary innovations tend to emerge from :9 while more incremental innovation may emerge from practice but there are many e,ceptions to each of these trends. *ser Innovation: An important innovation factor includes customers buying products or user services. As a result, firms may incorporate users in focus groups 4users centered approach5, work closely with so$called lead user 4Lead user$approach5 or users might adapt their products themselves. :egarding this user innovation, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. In most of times user innovators have some personal record motivating them. -ometime user innovators become entrepreneurs selling their product, they may choose to trade their innovation in e,change for other innovations or they may de adopted by their suppliers. 0ow$a$days, they may also choose to freely reveal their innovation using methods like open source. In such networks of innovations the users or communities of users can further develop technology and reinvent their social meaning.
solution. They come up with seminars and trainings to keep their employees stimulated to create something useful for others and in turn, financial gain for the company. Competition: %ther factors that raises the importance of innovation in entrepreneurship is competition. It stimulates any entrepreneur to come up with something much better than their competition in a lower price, and still be cost$effective and #ualitative. Community Needs: -mall businesses see the importance of innovation in entrepreneurship. They were able to compete with large industry and see their value in the economy. -mall businesses are important as they are directly involved in the community and therefore, contribute to their financial and economic gain. These small businesses know e,actly what community needs and fulfill them. All things start small. Innovation is important not 6ust in entrepreneurship. As individuals, we are innovators by adapting well to our needs and create our own solutions. !ntrepreneurs are the same. The innovation in entrepreneurship helped the country by changing with the times and producing new products and service from ones that already e,ists. And, being innovative has helped us become successful in all our endeavors. 333333333333333333333333333333333333333333333333333333
A follower is able to learn more #uickly 4e.g. to fi, starting errors5 and to achieve the readiness for marketing #uicker than the innovator. The innovator overestimates his innovation power and his organi+ational capabilities 4e.g. change management, financial resources5 to bring an innovation to the market place. 2isinterpretation of the market. The new product is e,cellent in terms of technical specifications. espite these features no customer is willing to pay for them, since their costs are higher than their e,pected benefits 4e.g. over engineered product5. Another option is that customers have a minor different behavior then e,pected 4e.g. do not accept your pricing policy, are less loyal5.
All these risks represent the line of a loss of resources for the innovator. In addition undeveloped products can cause reputation damages.
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